A unit of Baker Hughes, the third-biggest oilfield services company in the world, has pleaded guilty to bribing Kazakh middlemen to win business on the Karachaganak field. According to this news report, the company was already talking to the Kazakh goverment back in 2002/2003 about “settling cases related to the investigations”.

Now, the company has to pay all profits earned in Kazakhstan plus a hefty civil penalty and court charges, adding up to a whopping $44 million fine. The amount of information available is pretty stunning and gives a rare glimpse into the mechanisms of how to make deals with Kazakhoil (now Kazmunaigaz), namely via “third party commercial agents”. Fairly sketchy if you ask me.

The department’s charges were related to allegations of payments made to a so-called commercial agent between 2001 and 2003 knowing part of the money would be used as a bribe.

Prosecutors said the company paid about $4.1 million over about two years to a firm that transferred part of the money to an official of state-owned Kazakhoil.

Following the payments, Baker Hughes won a $219 million contract in the Karachaganak oil field.

The fine was that hefty because the company ignored a cease-and-desist order dating back to 2001, meaning essentially that something has been in the bushes for that long. While the case appeared briefly in the media in 2005, no details had been disclosed until the US Securities and Exchange Commission’s decision to end federal investigations this week.

There hasn’t been any reaction by the Kazakh government as of now, but it is rather likely that something along the lines of this 2005 statement will be made (when Karim Massimov commented on the ongoing James Giffen / Kazakhgate investigations):

“We do not view that James Giffen’ case [has anything to do with us]. In the view of Kazakhstan this is the case between U.S. citizen James Giffen and the U.S. government and we don’t see any involvement of either Kazakhstan or anybody official from Kazakhstan to be involved. That’s why we treat it as a U.S. internal case and we don’t think it will have [adverse] effect to Kazakhstan,” Massimov said.

Corruption is a two-sided business between those who give and those who take the bribe. Fair enough, the bribe got paid to a third party that relayed some of the cash to an official in a state-owned enterprise. Which secured a multi-million dollar deal for Baker Hughes.

Petty corruption is difficult to track down. But we’re talking seven-digit numbers. Something smells foul here, but that surely doesn’t surprise anyone.

Baker Hughes’s website wasn’t available at the time of writing.